Most favoured nation clause imports the "make available" test, excluding management service fees from Indian taxability.

Management service fees paid by an Indian subsidiary were treated as fees for technical services under the India-Sweden treaty only if the treaty's protocol and most favoured nation clause could import the later, more restrictive "make available" condition from the India-Portugal treaty. The protocol was read as part of the treaty framework, and the imported condition was applied to test taxability. Because the services involving management, marketing, HR, administration and coordination did not make available technical knowledge, skill, know-how or processes to the recipient, the fees were held not taxable in India and the addition was deleted.

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Issues: Whether the management service fees received from the Indian subsidiary were taxable in India as fees for technical services, and whether the assessee could invoke the most favoured nation clause in the protocol to the India-Sweden treaty to import the more restrictive "make available" condition from the India-Portugal treaty.

Analysis: The payment was for management, marketing, HR, administrative and coordination services. The dispute turned on the treaty definition of fees for technical services and the effect of the protocol to the India-Sweden DTAA. The treaty protocol was treated as an integral part of the agreement, and the more favourable scope later granted in the India-Portugal treaty was held applicable through the most favoured nation clause. On that basis, the "make available" condition governed taxability, and the services were found not to have made available technical knowledge, skill, know-how or processes to the recipient.

Conclusion: The management service fees were not taxable in India in the hands of the assessee, and the addition was deleted.

Ratio Decidendi: Where a treaty protocol contains a most favoured nation clause, the more restrictive scope of taxation granted in a later OECD treaty may be imported, and fees for technical services are taxable only if the relevant treaty condition of "make available" is satisfied.

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